In his article posted in the Financial Times website on the 17 February 2012, Clive Cookson from the Financial Times talks about how Prof Mariana Mazzucato and the research project FINNOV analysed the extent to which the financial system promotes or impedes growth in a range of high-tech and science-based sectors. He writes:
The three-year Finnov project (its name stands for finance innovation) analysed the extent to which the financial system promotes or impedes growth in a range of high-tech and science-based sectors. The results reveal a “dysfunctional” system, which has become worse during the current crisis.”
“The crisis has exposed deep flaws in conventional economic thinking on which financial policies and regulations have been based,” says Mariana Mazzucato of the University of Sussex, the project leader.
“The changing links between risks and rewards have contributed to an increasing ‘financialisation’ of the economy, and this has allowed parts of the financial services sector to extract value at the expense of industrial growth,” she adds. “This practice is undermining investment in productive activity.”
Finnov debunks what the researchers call a series of myths about the financial system’s role in supporting innovation-led growth. Most importantly, its report says policymakers should reject the myth that markets are the best way to co-ordinate economic activity and “recognise the important role played by the state in supporting and encouraging innovation.
